CEO says Hong Kong unrest disrupted business despite global revenue increasing 28% to $294 million
Canada Goose Holdings Inc. fell on Wednesday after saying that unrest in Hong Kong hurt its business there and forecasting wholesale revenue will decline this quarter. Earlier, the stock had risen, bolstered by sales in Asia.
Chief Executive Officer Dani Reiss said Hong Kong performance was significantly impacted by protests. Earlier, the parka maker reported global revenue increased 28% to C$294 million (US$221 million) in the fiscal second quarter, outpacing projections. The company didn’t raise its guidance for the full year and reiterated its fiscal 2020 outlook. For more details, see here.
Key Insights
While the Toronto-based company cited “standout performances in Asia” during last quarter in its statement, the follow-up comments about Hong Kong sparked a sharp reversal in the shares. Despite the disruptions, demand in China remains strong, the company said.
Canada Goose also posted strong sales growth in the U.S., where it has faced increased scrutiny since going public over the use of coyote fur in its parkas. California became the first U.S. state to ban fur sales in October, with legislation to take effect in 2023.
Management has moved to broaden its offerings beyond winter products, adding items such as rain gear and lightweight jackets. The company acquired bootmaker Baffin Inc. for C$32.5 million late last year to begin building a footwear business under the Canada Goose name.
Market Reaction
U.S. shares of Canada Goose fell as much as 7.6%, the most intraday in about three months, to $36.06 in New York. They had lost 11% this year through Tuesday’s close, compared with the 22% gain in the S&P 500 Retailing Index.
